NEW YORK: Oil prices fell in choppy trading on Thursday after OPEC and allied exporting countries ended a meeting without announcing a decision to cut crude output, and prepared to debate the matter on Friday.
The Organization of the Petroleum Exporting Countries (OPEC) met in Vienna to decide production policy in coordination with other countries including Russia, Oman and Kazakhstan.
An OPEC delegate said the organization had agreed on a tentative deal to cut oil output but had not come up with a final figure.
Earlier, Saudi Energy Minister Khalid Al-Falih said OPEC needed Russia to cooperate, and said a decision was likely by Friday evening.
“If everybody is not willing to join and contribute equally, we will wait until they are,” Al-Falih said.
Market watchers had expected a joint cut of 1 million to 1.4 million barrels per day (bpd).
Brent crude futures were down $2.57, or 4.2 percent, on the day to $58.99 a barrel by 4:41 p.m. GMT, off the session low of $58.36. US crude futures fell $2.37, or 4.5 percent, to $50.52 a barrel, bouncing off the session low of $50.08 a barrel.
The crude benchmarks have slumped about 30 percent this quarter.
Prices found support briefly after data showed US crude stockpiles declined last week for the first time in 11 weeks. The US became a net exporter of crude and refined products for the first time since at least 1991, data from the US Energy Information Administration showed.
“Fears of a further escalation in the US-China trade war, and potential for OPEC+ not cutting oil production deep enough will continue to weigh on oil prices in today’s trading session,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London.
“All eyes are now fixated on (an) OPEC+ joint declaration, and a combined output cut of at least 1 million barrels per day will be required to see a meaningful recovery in oil prices.”
Led by Saudi Arabia, OPEC’s crude oil production has risen by 4.1 percent since mid-2018, to 33.31 million bpd.
European equities hit their lowest in two years and commodity-sensitive currencies such as the Russian rouble fell sharply, in part because of the slide in the oil price, but also with the arrest of a top executive of Chinese tech giant Huawei in Canada for extradition to the US. The arrest came just as Washington and Beijing prepare for crucial trade negotiations.
Barclays said in its Global Outlook published on Thursday that “investors need to lower their expectations” and “2019 should be a period of lower returns and higher volatility.”
Barclays said it expected “the global economy to slow over the next several quarters” although it added that “not one major economy is near recession.”
US crude inventories have climbed steadily as domestic production surged to new peaks. Exports of US crude also jumped to a record 3.2 million barrels per day last week, adding to global supplies. Stockpiles at Cushing, Oklahoma, the delivery point for US crude futures, rose to the highest in nearly a year.
Oil dives after OPEC delays output decision
Oil dives after OPEC delays output decision
- OPEC met in Vienna to decide production policy in coordination with other countries including Russia, Oman and Kazakhstan
- An OPEC delegate said the organization had agreed on a tentative deal to cut oil output but had not come up with a final figure
Global brands shut Middle East stores as conflict causes chaos
- Luxury brands and retailers close stores in Middle East
- Conflict threatens the region that has been luxury’s fastest growing
- Mass-market retailers monitor situation, adjust operations in region
PARIS: In Dubai and other major Middle Eastern shopping hubs, many stores are closed or operating with a skeleton staff as the escalating conflict in the region causes chaos for businesses and travel.
The US-Israeli air war against Iran expanded on Monday with no end in sight, with Tehran firing missiles and drones at Gulf states as it retaliates for a weekend of bombing that killed Iran’s supreme leader and reportedly killed scores of Iranian civilians, including a strike on a girls’ primary school.
Chalhoub Group, which runs 900 stores for brands from Versace and Jimmy Choo to Sephora across the region, said its stores in Bahrain were closed, while other markets, including the UAE, Saudi Arabia, and Jordan remained open though staff attendance was “voluntary.”
“We operate with a lean team formed of members who volunteered and feel comfortable to come to the store,” Chalhoub’s Vice President of Communications Lynn al Khatib told Reuters, adding that the company’s leadership team personally visited Dubai Mall and Mall of the Emirates on Monday morning to check in with workers.
E-commerce giant Amazon closed its fulfillment center operations in Abu Dhabi, suspended deliveries across the region and instructed its employees in Saudi Arabia and Jordan to remain indoors, Business Insider reported on Monday, citing an internal memo.
Gucci-owner Kering said its stores were temporarily closed in the UAE, Kuwait, Bahrain and Qatar and it has suspended travel to the Middle East.
Luxury growth engine under threat
Shares in luxury groups LVMH, Hermes, and Cartier-owner Richemont were down 4 percent to 5.7 percent on Monday afternoon as investors digested the knock-on impacts of the conflict.
The Middle East still accounts for a small share of global spending on luxury — between 5 percent and 10 percent, according to RBC analyst Piral Dadhania. But the region was “luxury’s brightest performer” last year, according to consultancy Bain, while sales of expensive handbags have stalled in the rest of the world.
Now, shuttered airports have put an abrupt stop to tourism flows into the region and missile strikes — including one that damaged Dubai’s five-star Fairmont Palm hotel — are likely to dissuade travelers, particularly if the conflict drags on.
“If you assume that it’s a $5 billion to $6 billion (travel retail) market and let’s say it’s going to be shut down for a month, we are talking about hundreds of millions of dollars that are definitely at risk,” said Victor Dijon, senior partner at consultancy Kearney.
If Middle Eastern shoppers cannot travel to Paris or Milan, that could also hurt luxury sales in Europe, he added.
Luxury brands have been investing in lavish new stores and exclusive events across the region. Cartier unveiled a “high-jewelry” exhibition in Dubai’s Keturah Park just days before the conflict started.
Cartier and Richemont did not reply to requests for comment.
Luxury conglomerate LVMH has also bet big on the region. Last month, its flagship brand Louis Vuitton staged an exhibition at the Jumeirah Marsa Al Arab hotel, and beauty retailer Sephora launched its first Saudi beauty brand.
LVMH does not report specific figures for the region, but in January Chief Financial Officer Cecile Cabanis said the Middle East has been “displaying significant growth.” LVMH did not reply to a request for comment on how its business may be impacted by the conflict.
The Middle East has also attracted new investment from mass-market players. Budget fashion retailer Primark said in January that it plans to open three stores in Dubai in March, April and May, followed by stores in Bahrain and Qatar by the end of the year.
“Primark is set to open its first store in Dubai at the end of March but clearly this is a fast-moving situation which we are monitoring closely,” a spokesperson for Primark-owner Associated British Foods said.
Apple stores in Dubai will remain closed until Thursday morning, the company’s website showed, while Swedish fast-fashion retailer H&M said its stores in Bahrain and Israel are closed.
Consumer goods group Reckitt has told all employees in the Middle East to work from home, temporarily closed its Bahrain manufacturing site and suspended all business travel to the region until further notice.
